Supreme Court to hear Pimlico Plumbers employment status case

The Supreme Court is to review a Court of Appeal decision today (Tuesday 20 February 2018), which ruled that former plumber Gary Smith worked for Pimlico Plumbers as a worker rather than as a self-employed contractor, entitling him to employment rights such as access to reasonable adjustments and holiday pay.

The case, Pimlico Plumbers and Charlie Mullins v Gary Smith, was originally brought by Smith to the Employment Tribunal (ET) in 2012, where he argued that he was wrongfully dismissed by Pimlico Plumbers in May 2011 after he suffered a heart attack in January 2011. He had worked for the plumbing organisation for six years from August 2005.

The ET ruled that Smith was a worker rather than a self-employed contractor due to the measures laid out in an employment agreement between Smith and Pimlico Plumbers. The employment agreement was first issued in 2005 and then updated in 2009.

Although Smith had some degree of flexibility over the hours he worked and was treated as self-employed for tax and VAT purposes, the 2005 and 2009 employment agreements required Smith to wear a uniform and drive a hired van carrying Pimlico Plumbers’ logo and work a five-day working week consisting of a minimum of 40 hours. Smith would also have to liaise with Pimlico Plumbers regarding any annual leave or time off.

Pimlico Plumbers appealed the ET’s ruling, and Smith cross-appealed to the Employment Appeal Tribunal (EAT). Both were dismissed.

The case was then taken to the Court of Appeal, which upheld the ET’s decision in February 2017. It found that Smith was a worker because he provided work personally for Pimlico Plumbers, was obliged to work a set number of hours on agreed days, and that there was a high degree of restriction on Smith’s ability to work in a competitive situation, suggesting that he was not in business on his own account.

Charlie Mullins OBE, chief executive officer at Pimlico Plumbers, said: “This case is not like Uber and the other ‘gig-economy’ cases. The engineers who contract to Pimlico Plumbers are very highly skilled individuals, can go anywhere and do whatever they want. They earn six-figures when they work with our customers, which is why they are so keen to do it. It is also true that engineers can choose when they want to work. They do not have to make themselves available to Pimlico Plumbers, and can take time off whenever they want.

“As [an organisation], Pimlico Plumbers wants to comply with its obligations and it has always been our genuine belief that we have been doing that. [HM Revenue and Customs] has looked into the situation in the past and told us that engineers are self-employed. We have been operating in accordance with that.

“Employment law in the UK is very unclear, and hopefully we can all get some clarity from the Supreme Court on this situation, which will have huge implications for many industries, including plumbing and construction.

“The UK is going through a huge cultural change in how people work, and how they are paid, and what we need more than anything else this week is a ruling that takes into account what is happening on the building sites, offices, press rooms and hospital wards of the 21st century, not one that harks back to the 1950s.”

Alan Lewis, employment partner at Irwin Mitchell, said: “The outcome of the case could be significant and if it rules against Pimlico it will mean that the plumbers will be entitled to basic workers’ rights such as the national minimum wage and paid holiday. They will also be able to bring discrimination claims.

“It could have wider repercussions too. It is estimated that as many as five million people work in the gig economy, getting paid for ‘gigs’ they do, such as delivering food, packages or making car journeys.

“One implication of the acquisition of workers’ rights could well be a threat to the economic viability of the gig economy model. If national minimum wages, rest breaks and holiday pay leads to an inevitable increase in the overheads of engaging people to work, prices for the consumer will increase. That could reach a level where demand for the services tails off and a sector that created the ability for millions of individuals to work flexibly shrinks or even disappears.”

Seb Maley, chief executive officer at Qdos Contractor, added: “Following recent Uber and Deliveroo verdicts, the Pimlico Plumber case is yet another example of why employment status legislation must be simplified. With the lines currently blurred, it makes it incredibly confusing for the growing number of self-employed and gig economy workers to know where they stand with regards to employment rights.

“Recent changes to IR35 in the public sector also strengthens the argument for a simplification of the rules, given that it is clients who now decide a worker’s employment status for tax reasons. With the prospect of IR35 reform reaching the private sector as early as April 2019, the need for clear legislation defining the differences between a self-employed worker and employee have never been greater.”